The CFO of M Corp estimates the number of units sold for May and June to be 5,000 units and 6,000 units respectively. These units will be sold at a price of $40 per unit. The CFO estimates that 40% of sales will be credit sales and 60% of the credit sales amount will be received in a month after the sales are made with balance paid off in the following month. How much cash is expected to be collected in June?

Question

Quizplus · Accepted Answer

Expected Cash Receipts = Expected Cash Sales + Expected Accounts Receivable
Expected Cash Receipt = Cash Sales for the Month of June + Accounts Receivable for June = (6,000 × $40 × 60%) + (5,000 × $40 × 40% × 60%) = $144,000 + $48,000 = $192,000.

The CFO of M Corp Estimates the Number of Units